Liberty of Contract and Lochner v. New York

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All persons born or naturalized in the United States, and subject to the jurisdiction thereof, are citizens of the United States and of the State wherein they reside. No State shall make or enforce any law which shall abridge the privileges or immunities of citizens of the United States; nor shall any State deprive any person of life, liberty, or property, without due process of law; nor deny to any person within its jurisdiction the equal protection of the laws.

The doctrine of economic substantive due process is grounded in the concept that “liberty of contract” is a right protected by the Due Process Clause. This idea, originally advanced by Justices Joseph Bradley and Stephen Field in dissent in the Slaughter-House Cases,1 later became accepted doctrine in Allgeyer v. Louisiana,2 in which the Court invalidated a state law that prohibited out-of-state insurance corporations from conducting business in the state without maintaining a place of business and authorized agent there. In concluding that the state law violated the Due Process Clause, the Court held that “[t]he liberty mentioned in that [Fourteenth] amendment . . . embrace[s] the right of the citizen to . . . earn his livelihood by any lawful calling[,] to pursue any livelihood or avocation,” and to enter all contracts necessary to fulfill those purposes.3 The Court subsequently applied this doctrine repeatedly through the early part of the twentieth century to strike down both state and federal economic regulations.

The Court, however, upheld some labor regulations and acknowledged that freedom of contract was “a qualified and not an absolute right.” 4 Liberty, according to the Court, “implies the absence of arbitrary restraint, not immunity from reasonable regulations and prohibitions imposed in the interests of the community.” Thus, with respect to labor regulations, the Court reasoned the legislature has a “wide field of discretion” to impose regulations suitable to protect “health and safety” and “designed to insure wholesome conditions of work and freedom from oppression.” 5

Still, the Court was committed to the principle that freedom of contract is the general rule and that legislative efforts to abridge it could be justified only by exceptional circumstances. To serve this end, the Court intermittently shifted the burden of proof in a manner best illustrated by comparing the early cases of Holden v. Hardy6 and Lochner v. New York.7 In Holden v. Hardy,8 the Court considered the constitutionality of a state law that limited the number of work hours for underground miners and smelters. In upholding the state law, the Court presumed the law’s validity and allowed the burden of proof to remain with those attacking the law.9 Recognizing that mining had long been the subject of state regulation due to the associated health and safety risks, the Court registered its willingness to sustain a law that the state legislature had determined to be “necessary for the preservation of health of employees,” and for which there were “reasonable grounds for believing that . . . [it was] supported by the facts.” 10

Seven years later, however, a different Court found in Lochner v. New York11 that a state law restricting employment in bakeries to ten hours per day and sixty hours per week was a labor regulation rather than a true health measure, and thus unconstitutionally interfered with the right of adult laborers to contract for their means of livelihood. Denying that the Court was substituting its own judgment for that of the legislature, Justice Rufus Peckham, writing for the Court, nevertheless maintained that whether the act was within the police power of the state was a question the Court must answer.12 Notwithstanding the medical evidence proffered—and implicitly shifting the burden of proof onto the state seeking to enforce the law—the Justice questioned whether the proffered statistics adequately demonstrated the trade of a baker to be “an unhealthy one.” 13

In dissent, Justice John Harlan argued that the law was a health regulation, noting the abundance of medical testimony in the record showing that the life expectancy of bakers was below average, that their capacity to resist diseases was low, and that they were peculiarly prone to suffer irritations of the eyes, lungs, and bronchial passages.14 In his view, the existence of such evidence left the reasonableness of the measure open to discussion and thus within the discretion of the legislature.15

A second dissenting opinion, written by Justice Oliver Wendell Holmes, did not reject the basic concept of substantive due process, but rather the Court’s categorical presumption against economic regulation based on a particular economic theory.16 In his view, “a constitution is not intended to embody a particular economic theory, whether of paternalism and the organic relation of the citizen to the State or of laissez-faire.” 17 Rather, he continued, “it is made for people of fundamentally differing views.” 18 Thus, according to Justice Holmes, “the word liberty in the Fourteenth Amendment is perverted when it is held to prevent the natural outcome of a dominant opinion,” i.e., a duly enacted state law, unless the law “would infringe fundamental principles as they have been understood by the traditions of our people and our law.” 19 As such, in Justice Holmes’ view, presuming the validity of state laws—including those that regulate economic regulation—was the better approach.

Following Justice Holmes’s dissent, Muller v. Oregon20 and Bunting v. Oregon21 upheld state regulations that limited work hours in certain industries. The Court reached these results by concluding that the regulations were supported by evidence despite the shift in the burden of proof.22 As a result of these decisions, counsel defending the constitutionality of similar legislation developed the practice of submitting voluminous factual briefs, known as “Brandeis Briefs,” 23 replete with medical or other scientific data intended to establish beyond question a substantial relationship between the challenged statute and public health, safety, or morals.24

While the Court generally approved regulating work hours as permissible health measures, it rejected minimum wage law as unlawfully interfering with the freedom of contract.25 Over objections that regulating wages were just as relevant to workers’ health and morals as regulating work hours,26 the Court held that a minimum wage regulation is a “price-fixing” law that bore no reasonable connection to the objectives of health or safety.27

During the Great Depression, however, the laissez-faire tenet of self-help was replaced by the belief that a government role is to help those who are unable to help themselves.28 To sustain such remedial legislation, the Court had to revisit its concepts of liberty under the Due Process Clause. Thus, in West Coast Hotel v. Parrish,29 the Court expressly overturned its precedents to uphold a Washington minimum wage law, taking into account the “unparalleled demands for relief” resulting from the Great Depression. In so holding, the Court reiterated that freedom of contract is “a qualified and not an absolute right” that may be restricted in furtherance of public interest.30

1: See 183 U.S. (16 Wall.) 36, 83–111 (1873) (Field, J., dissenting); id. at 111–124 (Bradley, J., dissenting).
2: 165 U.S. 578, 589 (1897); see also Coppage v. Kansas, 236 U.S. 1, 14 (1915) (stating that “[i]ncluded in the right of personal liberty and the right of private property—partaking of the nature of each—is the right to make contracts for the acquisition of property,” “including for personal employment, and that [i]f this right be struck down or arbitrarily interfered with, there is a substantial impairment of liberty in the long-established constitutional sense” ).
3: Allgeyer, 165 U.S. at 589.
4: Chi., Burlington & Quincy R.R. v. McGuire, 219 U.S. 549, 567 (1911).
5: Id. at 570. See also Wolff Packing Co. v. Industrial Court, 262 U.S. 522, 534 (1923).
6: 169 U.S. 366 (1898).
7: 198 U.S. 45 (1905).
8: 169 U.S. at 398.
9: See id. 393–98.
10: Id. at 398.
11: 198 U.S. 45 (1905).
12: Id. at 57.
13: Id. at 59.
14: See id. at 69–72.
15: See id. at 73–74 (Harlan, J., dissenting) ( “No evils arising from such legislation could be more far-reaching than those that might come to our system of government if the judiciary, abandoning the sphere assigned to it by the fundamental law, should enter the domain of legislation, and upon grounds merely of justice or reason or wisdom annul statutes that had received the sanction of the people’s representatives. . . . [L]egislative enactments should be recognized and enforced by the courts as embodying the will of the people, unless they are plainly and palpably, beyond all question, in violation of the fundamental law of the Constitution.” ).
16: See id. at 75–76.
17: Id.
18: Id.
19: Id.
20: 208 U.S. 412 (1908).
21: 243 U.S. 426 (1917).
22: See Muller, 208 U.S. at 419–20; Bunting, 243 U.S. at 438–39.
23: Named for attorney (later Justice) Louis Brandeis, who presented voluminous documentation to support regulating women’s working hours in Muller v. Oregon, 208 U.S. 412 (1908).
24: See Muller, 208 U.S. at 419 (referencing the Brandeis brief filed in the case as containing a “very copious collection” of relevant factual support for the state regulation).
25: The Court first considered the validity of minimum wage laws in the context of a District of Columbia statute in Adkins v. Children’s Hosp., 261 U.S. 525 (1923). Because the Fifth and not the Fourteenth Amendment applies to the District of Columbia, the Court analyzed the statute under the Fifth Amendment’s Due Process Clause but incorporated the relevant case law it had developed under the Fourteenth Amendment with respect to state laws. See id. at 545–50. The Court later applied Adkins to strike down a New York minimum wage law in Morehead v. New York ex rel. Tipaldo, 298 U.S. 587 (1936).
26: See Adkins, 261 U.S. at 565–66 (Taft, C.J., dissenting) ( “If I am right in thinking that the legislature can find as much support in experience for the view that a sweating wage has as great and as direct a tendency to bring about an injury to the health and morals of workers, as for the view that long hours injure their health, then I respectfully submit that Muller v. Oregon, 208 U.S. 412, controls this case.” ); id. at 569–70.
27: Id. at 554–59.
28: See Dobbs v. Jackson Women’s Health Org., No. 19-1392, slip. op 44 (U.S. June 24, 2022) (Kagan, J., dissenting) (noting that after the Great Depression brought “unparalleled economic despair” and “undermined . . . the assumption that a wholly unregulated market could meet basic human needs,” the “laissez-faire approach” “was recognized everywhere outside the Court to be dead” (internal quotations omitted)).
29: 300 U.S. 379, 395–99 (1937).
30: See id. at 392.